Chapter V - Income of Other Persons Included in Total Income of Assessee
Section 100
Section 100: liability of person in respect of income included in income of another person
Section 100 addresses a practical follow-on question from the clubbing rules in this Chapter: once someone else's income has been added to an assessee's total income and taxed there, who actually has to pay that portion of the tax? The answer is the person who holds the asset (or firm membership) that generated the income - not necessarily the assessee in whose hands it was taxed.
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This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
Where, income of a person, other than the assessee, arising from any asset, or income from membership of a firm, is included in the total income of the assessee under this Chapter or under section 25(a), then, irrespective of anything to the contrary contained in any other law in force,— (a) such person, in whose name such asset stands, or who is a member of the firm, shall be liable to pay, that portion of the tax levied on the assessee which is attributable to the income so included, upon service of notice of demand by the Assessing Officer in this behalf; (b) where any such asset is held jointly by more than one person, they shall be jointly and severally liable to pay such tax; and (c) the provisions of Chapter XIX-D shall apply accordingly.
Introduction
When another person's asset or firm income is included in the assessee's taxable income under the specified clubbing provisions, Section 100 allocates a corresponding payment liability to that other person once the Assessing Officer serves a notice of demand.
Key takeaways
Tax liability on clubbed income
Where another person’s asset or firm-membership income is included in the assessee’s total income under the specified clubbing provisions, that person can be required to pay the attributable portion of tax after notice.
Jointly held asset
Persons who jointly hold the asset are jointly and severally liable for that attributable tax.
What Section 100 says
Where income of a person other than the assessee - arising from an asset, or from membership of a firm - has been included in the assessee's total income under this Chapter or under Section 25(a), then irrespective of anything to the contrary in any other law, the person in whose name that asset stands, or who is the firm member, is liable to pay the portion of tax levied on the assessee that is attributable to the included income, once the Assessing Officer serves a notice of demand.
Where such an asset is held jointly by more than one person, they are jointly and severally liable to pay that tax.
The provisions of Chapter XIX-D (governing recovery of tax) apply accordingly to collect this liability.
Amount and notice
The liability is limited to the portion of the assessee's tax attributable to the included income. It arises under this section upon service of the Assessing Officer's demand notice, rather than from the mere fact that the asset stands in the other person's name.
Jointly held assets
If the relevant asset is held jointly by more than one person, the statute makes those holders jointly and severally liable for the attributable tax.
Step-by-step flow for applying Section 100
- 1
Has another person's income from an asset, or from membership of a firm, been included in the assessee's total income under Chapter V or Section 25(a)?
- No: Section 100 does not apply.
- Yes: Go to the next step.
- 2
Work out the tax attributable to the included income
Only that portion of the tax levied on the assessee can be recovered from the other person.
- 3
Has the Assessing Officer served a notice of demand on the other person?
- No: The other person's liability under this section is not yet enforced.
- Yes: The person in whose name the asset stands, or the firm member, must pay that portion.
- 4
Is the asset held jointly?
- Yes: The joint holders are jointly and severally liable.
- No: The single holder is liable.
- 5
Recovery
Chapter XIX-D applies accordingly to collect the amount.
Practical checklist
Do
- Identify the amount of income included under Chapter V or Section 25(a) and calculate the attributable tax portion.
- Keep the notice of demand and ownership or firm-membership records.
Avoid
- Do not attribute the assessee's entire tax bill to the asset holder without apportioning the included income.
- Do not overlook joint and several liability for a jointly held asset.
Illustrative example
Worked example: recovering clubbed tax from the spouse
Hypothetical facts (illustration only, not a real taxpayer): Mr. Iyer's total income includes ₹3,00,000 of interest earned by his wife on a deposit he gifted her, clubbed under Chapter V. The Assessing Officer works out that ₹60,000 of the tax levied on Mr. Iyer is attributable to that ₹3,00,000 (assumed figure; the actual amount depends on his full tax computation). The deposit stands in his wife's name alone.
Inclusion
The wife's income from an asset has been included in Mr. Iyer's total income, so Section 100 is engaged.
Attributable tax
The portion of tax attributable to the included income is ₹60,000 (assumed).
Notice of demand
On service of a notice of demand by the AO, the wife, in whose name the deposit stands, is liable to pay ₹60,000.
Outcome
- The ₹60,000 can be recovered from the wife using Chapter XIX-D.
- If the deposit had been held jointly by the wife and another person, both would be jointly and severally liable for it.
Glossary
- Notice of demand
- The Assessing Officer's notice that triggers the specified person's payment liability under this section.
- Joint and several liability
- Each joint asset holder can be responsible for the relevant tax amount under Section 100(b).
Frequently asked questions
If my spouse's income is clubbed with mine and taxed in my hands, who actually pays that tax?
Under Section 100, the person in whose name the underlying asset stands (or who is the firm member generating the income) is liable to pay the portion of tax attributable to that clubbed income, once served a notice of demand by the Assessing Officer.
What if the asset generating clubbed income is jointly held?
All joint holders of that asset are jointly and severally liable to pay the tax attributable to the clubbed income.
Can the Assessing Officer recover the entire tax of the assessee from the other person?
No. Section 100(a) limits it to the portion of the tax levied on the assessee that is attributable to the income included from the other person, and only after a notice of demand is served.
Need help applying this provision to your situation?
Get help responding to a notice of demand for clubbed incomeLast updated 9 October 2026